Each new year brings changes from both the federal and state governments that can affect estate planning, estate administration, and elder planning. Understanding which rules apply federally and which apply at the New York level is especially important.

What is the Federal Estate Exemption in 2026?

At the federal level, uncertainty surrounded estate tax rules heading into 2026. Before the enactment of the Big Beautiful Bill Act in July 2025, the federal estate tax exemption was scheduled to sunset to approximately $7,000,000 per person, adjusted for inflation, a sharp reduction from the 2025 exemption of $13,990,000. The Act eliminated the sunset and set a new federal estate tax exemption of $15,000,000 per person. While described as “permanent,” future legislative changes remain possible.

What is the Federal Annual Gift Tax Exclusion in 2026?

The federal annual gift tax exclusion for 2026 remains at $19,000 per recipient. Gifts above this amount generally require the filing of a gift tax return and reduce the donor’s lifetime estate and gift tax exemption, though they do not usually result in immediate tax. Careful planning is especially important for larger lifetime gifts.

2026 Medicare Changes

Federal elder law rules also continue to evolve. For 2026, Medicare Part D includes a $2,100 cap on out-of-pocket prescription drug expenses and a maximum deductible of $615, although some plans offer lower or no deductibles. There will also be fewer Medicare Advantage plans available nationwide, with modest premium increases.

What is the New York Estate Tax Exemption in 2026?

New York maintains its own estate tax system, separate from federal law. The New York estate tax exemption for 2026 is projected to be $7,350,000, an increase of $190,000 from 2025.

Does New York Have a Gift Tax?

Unlike the federal system, New York does not have a gift tax. However, certain lifetime gifts can still impact a New York taxable estate. Under current law, gifts made within three years of death are generally pulled back into the decedent’s New York taxable estate. By contrast, if a decedent survives a gift by more than three years, the value of that gift is excluded from the New York estate for estate tax purposes. This rule makes timing an important consideration for New York residents engaging in lifetime gifting, particularly given New York’s estate tax “cliff,” which can result in the taxation of the entire estate if the exemption is exceeded.

Other Changes to Look Out For

Even for estates below the tax thresholds, planning remains critical, particularly for those planning for long-term care paid for by Medicaid. New York residents should monitor updated Medicaid income and asset limits, which affect eligibility for long-term care benefits.

Procedural changes continue in Surrogate’s Court. Although the Electronic Wills Act has passed the Legislature, it will not take effect until 545 days after being signed by the Governor. As a result, 2026 still requires traditional paper wills for probate. Recent legislation also allows next-of-kin notices to be served by mail, and in some cases by email, helping streamline estate administration.

Regular review of estate plans remains the best way to ensure compliance with evolving laws and personal goals.